Being involved in a car accident is a traumatic event in itself, so the news that your vehicle is damaged beyond repair is never going to be an easy pill to swallow.
While insurance will undeniably soften this blow, the reality is that there are so many variables at play when dealing with a write-off and many people – even those with the most seemingly comprehensive insurance policies – come out feeling hard done by.
'Not an exact science'
This is according to Christelle Colman, Managing Director and Founder of Elite Risk Acceptances, who says that being clued up about the process followed by insurers in the event of a car being written off, can help policyholders to better navigate the claims process and avoid any unnecessary financial loss.
"Generally speaking, an insurer will classify a car as a write off if the cost of repairs is high in relation to – or more than – the car’s insured value. This, however, is by no means an exact science and will depend on the car’s make, date of registration, and millage. Even the popularity of the car may come into play here, as this influences the availability and cost of repair parts," Colman says.
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Colman uses the example of an imported car, which may suffer relatively small damages, but due to the high cost of repairs, insurers will elect to write the vehicle off.
"In this instance, it will cost less to pay out the value of the vehicle in full, than to repair the damage. Insurers are also entitled to the salvage and will in terms of their agreements, recover a portion of the claims cost from the salvage dealer.”
That said, she points out that some premium insurers will replace a car with a brand new one if it is written off within the first year or two of registration.
Factors to consider
"While the Elite policy offers 'new for old' within the first two years of a car’s registration, this benefit is not always included in other motor insurance policies, so it’s best to request this when insuring a new vehicle.
"When this 'new for old' benefit is not applicable, insurers tend to settle the full retail amount in cash following a total loss, less the applicable excesses, which is another very important consideration. Too often, policyholders only find out about hefty excess structures at the time of a loss when they are ill-prepared to afford the payments," Colman explains.
Differentiating between retail, market and book value, and knowing which one a car is insured for, is another topic that Colman says causes untold confusion for policyholders.
"Unfortunately, even some insurers seem to have different definitions of what market, book, retail or guaranteed sum insured values are, so my advice would be to get this question on record and make an informed decision with your insurer or broker," she goes on to say.
"With Elite, you can choose to insure your vehicle at retail value (as obtained from the various independent data sets we have at our disposal as insurers) or at an agreed value where the vehicle is deemed a vintage car.
"You may also elect to guarantee the retail value of the vehicle for 12 months, which means if there is a total loss within the first year, you will not be penalised for the depreciation in the vehicle retail value," Colman explains.
If the accident was caused by another individual, Colman says that an insurer will usually action third party recovery on the policyholder’s behalf.
"Where the recovery is successful, the policyholder will be refunded the excess paid as well as having their no claims record reinstated.
"It is therefore vital to get all the information at the scene of the accident, including photographs of the accident scene and vehicle, as this can greatly assist insures to make a successful recovery of damages caused by a third party," she adds.
Lastly, Colman urges people to check and understand whether their policy covers a courtesy car in the event of a write-off.
"This extension is included in the Elite policy, but often it is elective and carries an additional premium. We find that policyholders are often left unable to get to work or execute on their duties as the insured vehicle is either in for a long period of repairs, or a waiting period following a write-off," she concludes.